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House supercommittee on military pensions approves panel report ‘subject to style;

June 9th, 2021

House supercommittee on military pensions approves panel report ‘subject to style;’ Panel chair Salceda goes for disability and life insurance, voluntary provident fund to supplement benefits

The House Ad hoc Committee on the Military and Uniformed Personnel (MUP) Pension System approved today the substitute bill to the various bills filed to overhaul the MUP pension system to make it more fiscally sustainable and to respond to various concerns of uniformed servicemembers. During the meeting, the panel’s chair.

Committee chair Joey Sarte Salceda (Albay, 2nd district) moved to have the committee report approved after significant issues were resolved among the committee members and with the military and uniformed services branches.

Key revisions from the previous committee hearings include the addition of disability benefits in the authorized insurance system on top of already legislated benefits, and the creation of a provident fund to be infused with voluntary contributions from MUPs.

Salceda pushed for added disability benefits under the risk insurance system to be created, in response to the suggestion of Rep. Raul Tupas to enhance the benefits package for MUPs who incur disabilities in the line of duty.

“The benefits that MUPs will receive from the insurance system we will create under the Trust Fund Committee will be on top of whatever benefits they are already entitled to. So, this is a way to balance our fiscal reform of the system with the unique risks the MUPs take,” Salceda said.

Salceda also acceded to the proposal of Rep. Rufino Biazon that there be a harmonized definition for what constitutes an MUP member.

Salceda says that law enforcement agencies such as the Philippine Drug Enforcement Agency should be included in the definition of uniformed services.

“We are just trying to fairly treat similarly situated branches. The proposal by Rep. Biazon is reasonable so I will accept it,” Salceda said.

MUP pension gap among biggest fiscal risks in PH history

Emphasizing the need to enact military pension reform urgently, Salceda compared the MUP pension liability with other fiscal risks the country encountered in the past.

Debts assumed by the Central Bank of the Philippines from the Marcos administration was 413.45 billion pesos or 25.3% of 1993 nominal GDP. Meanwhile, debts of the power sector were 1.24 trillion or 31.8% of 2001 nominal GDP. The MUP pension liability is 9.6 trillion pesos or 53.4% of 2020 nominal GDP.

“This is our longest-standing fiscal issue, actually. This started in 1978. President GMA had a study on the matter commissioned in 2004, when the problem became apparent. The first bill on this matter was filed in 2006. It has been 17 years since that study in 2004. In comparison, the CB debts were corralled in the CB Board of Liquidators within 7 years from the Cory administration’s beginning. It took 4 years to create the PSALM for power sector debts,” Salceda added.

“So it’s only right that we deal with this matter now while there is still a chance to do so, before this becomes an inevitable pain. With significant agreement among the members, we can move to approve this measure,” Salceda said.

Key features of the committee report include the removal of automatic indexation but retention of the no-contribution scheme, pension increases based on a cost-of-living adjustment, rationalizing pensionable age at 56 years old, allowing optional retirement at 20 years, higher risk insurance coverage for those wounded or killed in action, and the creation of a military and uniformed services trust fund, with leeway to initiate a credible defense posture.

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